Is Wayfair's Bottom-Line Beat Enough for Investors?

When Wayfair Inc. (NYSE: W) reported its third-quarter financial results before the markets opened on Tuesday, the e-commerce company said that it had $2.30 in earnings per share (EPS) and $3.8 billion in revenue. Consensus estimates had called for $0.80 in EPS on revenue of $3.65 billion. The same period of last year reportedly had a net loss of $2.23 per share on $2.31 billion in revenue.

During the latest quarter, active customers in the Direct Retail business reached 28.8 million, an increase of 50.9% year over year. Last 12 months (LTM) net revenue per active customer was $451, and orders per customer, measured as LTM orders divided by active customers, was 1.94 for the third quarter.

Repeat customers placed 71.9% of total orders in the third quarter of 2020, compared to 67.3% in the same period last year. Repeat customers placed a total of 11.3 million orders, an increase of 84.4%. Average order value was $243, versus $252 last year.

Total net revenues increased $1.5 billion, or 66.5% year over year. This consisted of U.S. net revenues increasing 66.5% year over year to $3.27 billion and International net revenues increasing 66.7% to $564.7 million.

Wayfair’s cash, cash equivalents and short-term investments totaled $2.56 billion at the end of the quarter, up from $987.0 million at the end of the previous fiscal year.

Management noted that its long-term mindset and strategic investments in merchandising, selection, service and delivery both in North America and in Europe are translating to share gains, sustained profitability, and positive free cash flow generation. While today’s unique environment has accentuated these trends, management remains confident that there is a long runway for continued strong profitable growth ahead for Wayfair.

The company offered no guidance for the fourth quarter. However, analysts so far expect $0.12 in EPS and $3.61 in revenue for the quarter.

Wayfair stock traded up 3.8% on Tuesday to $265.52. The 52-week range of $21.70 to $349.08, and the consensus price target is $305.38.

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